Developing a potential target list for a leading Private Equity firm

Posted by | Fuld & Company

A Private Equity firm with over 15 billion in Assets Under Management (AUM) sought assistance in developing an exhaustive target list of companies​ for a niche manufacturing subsector

Objective

The primary request was to identify suitable targets for a platform investment. Subsequently, the focus shifted to identifying complementary add-on opportunities, aiming to enhance the initial investment’s value and facilitate strategic expansion.

Solution

• Fuld worked in close collaboration with the Private Equity firm and their industry expert to develop a universe of around 300 companies operating within this niche industry.
• The target list was then segregated into two buckets:
  • Companies that fit within the firm’s investment criteria, and could potentially be established as a platform to make add-on investments
  • Smaller companies operating within this space to create a pipeline of future add-on acquisitions
  • To aid the decision-making process, Fuld supplemented the target list with other relevant financial and industry specific information for the targets:
    • General information: description, headquarters, ownership
    • Size indicators: revenue, EBITDA, employee count
    • Operational indicators: product offerings, manufacturing locations, end markets served, certifications possessed
  • Fuld provided recommendations to the Private Equity firm, enabling them to streamline their focus on the most attractive companies and efficiently narrow down the list to relevant targets. Fuld also helped create detailed profiles for these companies to enhance the target evaluation process.

Outcome

• The target list developed by Fuld allowed the firm to gain an encyclopedic view of the potential targets in this niche industry.
• Following the completion of the platform investment, the firm made three add-on investments over the following two years, increasing its revenues by 130%.
• Fuld continues to work closely with the firm, conducting due diligence and comprehensive valuation analysis to ensure it pays the correct price for its targets, and that add-on acquisitions make a positive contribution to growth and earnings from year one.

Tags: Financial Services, Investment Banking, private equity